Delegation Decisions in Finance

Felix Holzmeister, Martin Holmén (), Michael Kirchler, Matthias Stefan () and Erik Wengström
Additional contact information
Martin Holmén: Department of Economics, Centre for Finance, University of Gothenburg, 405 30 Göteborg, Sweden
Michael Kirchler: Department of Economics, Centre for Finance, University of Gothenburg, 405 30 Göteborg, Sweden; Department of Banking and Finance, University of Innsbruck, 6020 Innsbruck, Austria
Matthias Stefan: Department of Banking and Finance, University of Innsbruck, 6020 Innsbruck, Austria

Management Science, 2023, vol. 69, issue 8, 4828-4844

Abstract: Based on an online experiment with a sample of finance professionals and participants from the general population (acting as clients), we examine drivers and motives of clients’ choices to delegate investment decisions to agents. We find that clients favor delegation to investment algorithms, followed by delegation to finance professionals compensated with an aligned incentive scheme, and lastly to finance professionals receiving a fixed payment for investing on behalf of others. We show that trust in investment algorithms or finance professionals, and clients’ propensity to shift blame on others increase the likelihood of delegation, whereas clients’ own decision-making quality is associated with a decrease in delegation frequency.

Keywords: experimental finance; finance professionals; delegation decisions (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
http://dx.doi.org/10.1287/mnsc.2022.4555 (application/pdf)

Related works:
Working Paper: Delegation Decisions in Finance (2020)
Working Paper: Delegation Decisions in Finance (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:8:p:4828-4844

Access Statistics for this article

More articles in Management Science from INFORMS Contact information at EDIRC.
Bibliographic data for series maintained by Chris Asher ().